Phunware Reports Preliminary Full Year 2021 Financial Results

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AUSTIN, Texas, March 23, 2022 (GLOBE NEWSWIRE) -- Phunware, Inc. (NASDAQ: PHUN) (“Phunware” or “the Company”), a fully-integrated enterprise cloud platform for mobile that provides products, solutions, data and services for brands worldwide, today announced preliminary financial results for the year ended December 31, 2021.

“The past year was an incredibly pivotal period for Phunware, as we made significant progress across all key segments of our business,” said Alan S. Knitowski, President, CEO and Co-Founder of Phunware. “The combination of our direct and indirect go-to-market strategies came to fruition in conjunction with the re-opening of the post-pandemic economy, resulting in extremely promising opportunities for our core MaaS business. Additionally, the acquisition of Lyte Technology late last year not only materially added to our top line revenues, but it also diversified our business channels by providing a conduit to further expand our B2C customer vertical. As we ramped our blockchain initiatives in parallel, we are encouraged by the number of prospective companies that have taken interest in our new digital offerings. As the first publicly-traded company worldwide to launch its own cryptocurrencies, we fully intend to capitalize on the opportunities available to us in the nascent new realm of monetizing one’s own data inside of a sovereign global data economy. Going forward, we expect to accelerate this expansion via organic and inorganic initiatives on an international scale, including top-line revenue growth of 250% or more year-over year, all while strategically investing for efficiency and diversification.”

Full Year 2021 Preliminary Financial Results

  • Net Revenues for the year totaled $10.6 million
  • Multiscreen-as-a-Service (MaaS) Platform Subscriptions and Services Revenues were $5.3 million
  • Computer Hardware Revenues were $3.1 million
  • Net Loss was $(53.5) million
  • Net Loss per Share was $(0.71)
  • Non-GAAP Adjusted EBITDA Loss was $(11.7) million

The Company’s independent registered public accounting firm has not yet completed its annual audit for the year ended December 31, 2021. Although we don’t anticipate, information contained herein is subject to change.

“We are pleased with the way we closed the year and are even more excited about the opportunities for growth in 2022 and beyond,” said Matt Aune, CFO of Phunware. “In addition to the progress of our B2B MaaS offerings, we are thrilled with the growth of our B2C business. Lyte by Phunware posted record revenue in a partial fourth quarter and the sales of PhunToken continue to move up and to the right. Going forward, we are well positioned with our balance sheet to continue to execute our operational objectives while driving organic and inorganic growth.”

Recent Business Highlights

Conference Call Information

Phunware management will host a conference call today (March 23, 2022) at 5:00 p.m. Eastern Time (2:00 p.m. Pacific Time) to discuss its financial results for the year ended December 31, 2021.

Interested parties may access the conference call by dialing 888-506-0062 in the United States, or 973-528-0011 from international locations with access code: 161657. The conference call will be broadcast live and available for replay here and via the investor relations section of the Company’s website at investors.phunware.com.

Safe Harbor Clause and Forward-Looking Statements

This press release includes forward-looking statements. All statements other than statements of historical facts contained in this press release, including statements regarding our future results of operations and financial position, business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “expose,” “intend,” “may,” “might,” “opportunity,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.

The forward-looking statements contained in this press release are based on our current expectations and beliefs concerning future developments and their potential effects on us. Future developments affecting us may not be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) and other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors” in our filings with the Securities and Exchange Commission (the “SEC”), including our reports on Forms 10-K, 10-Q, 8-K and other filings that we make with the SEC from time to time. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. These risks and others described under “Risk Factors” in our SEC filings may not be exhaustive.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and developments in the industry in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this press release. In addition, even if our results or operations, financial condition and liquidity, and developments in the industry in which we operate are consistent with the forward-looking statements contained in this press release, those results or developments may not be indicative of results or developments in subsequent periods.

Disclosure Information

Phunware uses and intends to continue to use its Investor Relations website as a means of disclosing material nonpublic information and for complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor the Company’s Investor Relations website, in addition to following the Company’s press releases, SEC filings, public conference calls, presentations and webcasts.

About Phunware, Inc.

Everything You Need to Succeed on Mobile — Transforming Digital Human Experience

Phunware, Inc. (NASDAQ: PHUN), is the pioneer of Multiscreen-as-a-Service (MaaS), an award-winning, fully integrated enterprise cloud platform for mobile that provides companies the products, solutions, data and services necessary to engage, manage and monetize their mobile application portfolios and audiences globally at scale. Phunware’s Software Development Kits (SDKs) include location-based services, mobile engagement, content management, messaging, advertising, loyalty (PhunCoin & Phun) and analytics, as well as a mobile application framework of pre-integrated iOS and Android software modules for building in-house or channel-based mobile application and vertical solutions. Phunware helps the world’s most respected brands create category-defining mobile experiences, with approximately one billion active devices touching its platform each month when operating at scale. For more information about how Phunware is transforming the way consumers and brands interact with mobile in the virtual and physical worlds, visit https://www.phunware.com, https://phunwallet.com, https://www.phuncoin.com, https://www.phuntoken.com, and follow @phunware, @phuncoin and @phuntoken on all social media platforms.

Phunware PR & Media Inquiries:
Email: press@phunware.com
Phone: (512) 693-4199

Phunware Investor Relations:
Matt Glover and John Yi
Gateway Investor Relations
Email: PHUN@gatewayir.com
Phone: (949) 574-3860

Consolidated Balance Sheets
(In thousands, except share and per share information)

  December 31, 
2021 		  December 31, 
2020
Assets (Unaudited)    
Current assets:      
Cash $ 23,137     $ 3,940  
Accounts receivable, net of allowance for doubtful accounts of $10 and $356 at December 31, 2021 and 2020, respectively   967       664  
Inventory   2,636       —  
Digital currencies   32,581       —  
Prepaid expenses and other current assets   686       304  
Total current assets   60,007       4,908  
Property and equipment, net   —       13  
Goodwill   33,260       25,900  
Intangible assets, net   3,213       111  
Deferred tax asset   1,278       537  
Restricted cash   —       91  
Right-of-use asset   1,260       —  
Other assets   276       276  
Total assets   99,294       31,836  
Liabilities and stockholders’ equity (deficit)              
Current liabilities:              
Accounts payable $ 6,589     $ 8,462  
Accrued expenses   9,621       5,353  
Accrued legal settlement   —       3,000  
Lease liability   399       —  
Deferred revenue   3,973       2,397  
PhunCoin deposits   1,202       1,202  
Current maturities of long-term debt, net   4,904       4,435  
Warrant liability   3,605       1,614  
Total current liabilities   30,293       26,463  
Long-term debt   —       3,762  
Long-term debt - related party   —       195  
Deferred tax liability   1,278       537  
Deferred revenue   1,299       2,678  
Lease liability   1,147       —  
Deferred rent   —       180  
Total liabilities   34,017       33,815  
Commitments and contingencies (Note 11)              
Stockholders’ equity (deficit)              
Common stock, $0.0001 par value; 1,000,000,000 shares authorized at December 31, 2021 and 2020; 96,751,610 and 56,371,207 shares issued and outstanding as of December 31, 2021 and 2020, respectively   10       6  
Additional paid-in capital   264,944       144,156  
Accumulated other comprehensive loss   (352 )     (338 )
Accumulated deficit   (199,325 )     (145,803 )
Total stockholders’ equity (deficit)   65,277       (1,979 )
Total liabilities and stockholders’ equity (deficit)   99,294       31,836  

Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except per share information)

  Year Ended December 31,
  2021
   2020
  (Unaudited)    
Net revenues $ 10,643     $ 10,001  
Cost of revenues   7,030       3,357  
Gross profit   3,613       6,644  
Operating expenses:      
Sales and marketing   3,022       1,653  
General and administrative   13,256       15,361  
Research and development   4,179       2,628  
Legal Settlement   —       4,500  
Total operating expenses   20,457       24,142  
Operating loss   (16,844 )     (17,498 )
Other income (expense):      
Interest expense   (4,481 )     (3,413 )
Loss on extinguishment of debt   (7,952 )     (2,158 )
Impairment of digital currency   (9,383 )     —  
Fair value adjustment for warrant liabilities   (18,139 )     872  
Gain on forgiveness of PPP loan   2,850       —  
Other income, net   1       —  
Total other expense   (37,104 )     (4,699 )
Loss before taxes   (53,948 )     (22,197 )
Income tax benefit (expense)   426       (2 )
Net loss   (53,522 )     (22,199 )
Cumulative translation adjustment   (14 )     44  
Comprehensive loss $ (53,536 )   $ (22,155 )
       
Loss per share, basic and diluted $ (0.71 )   $ (0.50 )
       
Weighted-average common shares used to compute loss per share, basic and diluted   75,447       44,269  

Consolidated Statements of Cash Flows
(In thousands)

  Year Ended December 31,
  2021
   2020
Operating activities (Unaudited)    
Net loss $ (53,522 )   $ (22,199 )
Adjustments to reconcile net loss to net cash provided by operating activities:      
Accretion of debt discount and amortization of deferred financing costs   2,942       2,185  
Loss (gain) on change in fair value of warrant liability   18,139       (872 )
Loss on extinguishment of debt   7,952       2,158  
Loss on sale of digital currencies   9,383       —  
Gain on forgiveness of PPP loan   (2,850 )     —  
Stock-based compensation   4,941       4,492  
Deferred income taxes   —       —  
Other adjustments   (478 )     (40 )
Changes in operating assets and liabilities:      
Accounts receivable   (16 )     796  
Inventory   (949 )     —  
Prepaid expenses and other assets   (383 )     65  
Accounts payable   (1,568 )     427  
Accrued expenses   (1,131 )     1,064  
Accrued legal settlement   (3,000 )     3,000  
Lease liability payments   (802 )     —  
Deferred revenue   (1,172 )     (2,049 )
Net cash used by operating activities   (22,514 )     (10,973 )
Investing activities      
Purchases of digital currencies   (41,284 )     —  
Acquisitions, net of cash acquired   (5,101 )     —  
Net cash used in investing activities   (46,385 )     —  
Financing activities      
Proceeds from borrowings, net of issuance costs   14,711       14,815  
Proceeds from related party bridge loans   —       560  
Payments on borrowings   (26,243 )     (8,418 )
Payments on related party notes   —       (560 )
Net repayments on factoring agreement   —       (1,077 )
Proceeds from sales of common stock, net of issuance costs   94,737       9,177  
Proceeds from warrant exercises   4,635       —  
Proceeds from exercise of stock options   179       99  
Net cash provided by financing activities   88,019       14,596  
Effect of exchange rate on cash and restricted cash   (14 )     46  
Net increase (decrease) in cash and restricted cash   19,106       3,669  
Cash and restricted cash at the beginning of the period   4,031       362  
Cash and restricted cash at the end of the period $ 23,137     $ 4,031  
Supplemental disclosure of cash flow information      
Interest paid $ 1,364     $ 1,251  
Income taxes paid $ —     $ —  


  Year Ended December 31,
  2021   2020
Supplemental disclosure of non-cash information      
Issuance of common stock under employee benefit plans $ 100   $ —  
Issuance of common stock for payment of legal, earned bonus and board of director fees $ 66   $ 1,283  
Non-cash issuance of common stock upon partial exercise of a warrant $ 16,147   $ —  
Issuance of common stock upon partial conversions of Senior Convertible Note $ —   $ 2,266  
Reacquisition of equity component of Senior Convertible Note $ —   $ (1,388 )
Equity classified cash conversion feature of Senior Convertible Note $ —   $ 219  

Non-GAAP Financial Measures and Reconciliation

Our non-GAAP financial measures include adjusted gross profit, adjusted gross margin and adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA") (our "non-GAAP financial measures"). Our non-GAAP financial measures should be considered in addition to, not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. They are not measurements of our financial performance under GAAP and should not be considered as alternatives to revenue or net loss, as applicable, or any other performance measures derived in accordance with GAAP and may not be comparable to other similarly titled measures of other businesses. Our non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our operating results as reported under GAAP. Some of these limitations include: (i) Non-cash compensation is and will remain a key element of our overall long-term incentive compensation package, although we exclude it as an expense when evaluating its ongoing operating performance for a particular period, (ii) Our non-GAAP financial measures do not reflect the impact of certain charges resulting from matters we consider not to be indicative of ongoing operations, and (iii) other companies in our industry may calculate our non-GAAP financial measures differently than we do, limiting their usefulness as comparative measures.

We compensate for these limitations to our non-GAAP financial measures by relying primarily on our GAAP results and using our non-GAAP financial measures only for supplemental purposes. Our non-GAAP financial measures include adjustments for items that may not occur in future periods. However, we believe these adjustments are appropriate because the amounts recognized can vary significantly from period to period, do not directly relate to the ongoing operations of our business and complicate comparisons of our internal operating results and operating results of other peer companies over time. Each of the normal recurring adjustments and other adjustments described in this paragraph help management with a measure of our operating performance over time by removing items that are not related to day-to-day operations or are non-cash expenses.

Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except percentages)

  Year Ended December 31,
  2021
   2020
(in thousands)  
Net loss $ (53,522 )   $ (22,199 )
Add back:  Depreciation and amortization   240       153  
Add back:  Interest expense   4,481       3,413  
(Less) Add back:  Income tax (benefit) expense   (426 )     2  
EBITDA   (49,227 )     (18,631 )
Add back: Stock-based compensation   4,941       4,492  
Add back: Legal settlement   —       4,500  
Add back: Loss on extinguishment of debt   7,952       2,158  
Add back: Impairment of digital currencies   9,383       —  
Add back (Less): Fair value adjustment for warrant liabilities   18,139       (872 )
Less: Gain on forgiveness of PPP loan   (2,850 )     —  
Adjusted EBITDA $ (11,662 )   $ (8,353 )


  December 31,
  2021
   2020
(in thousands, except percentages)      
Gross profit $ 3,613     $ 6,644  
Add back:  Amortization of intangibles   7       21  
Add back:  Stock-based compensation   1,050       274  
Adjusted gross profit $ 4,670     $ 6,939  
Adjusted gross margin   43.9 %     69.4 %

Supplemental Information
(In thousands, except percentages)

  Year Ended December 31,   Change
(in thousands, except percentages) 2021   2020   Amount   %
Net Revenue          
Platform subscriptions and services $ 5,308     $ 9,108     $ (3,800 )   (41.7 )%
Computer hardware   3,095       —       3,095     100.0 %
Application transaction   2,240       893       1,347     150.8 %
Total revenue $ 10,643     $ 10,001     $ 642     6.4 %
Platform subscriptions and services as a percentage of total revenue   49.9 %     91.1 %        
Computer hardware as a percentage of total revenue   29.1 %     — %        
Application transactions as a percentage of total revenue   21.0 %     8.9 %        

 


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Source: Phunware, Inc.

Released March 23, 2022